DOJ Statement on Dallas City Hall Corruption Case

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The following is a news release from the Department of Justice and U.S. Attorney James T. Jacks of the Northern District of Texas.

At separate sentencing hearings today, U.S. District Judge Barbara M.G. Lynn sentenced housing developers Brian L. Potashnik and Cheryl L. Potashnik, who were convicted in what has become known as the “Dallas City Hall Corruption Case,” announced U.S. Attorney James T. Jacks of the Northern District of Texas.

This morning Judge Lynn sentenced Brian Potashnik, 52, to 14 months in prison and to pay a $50,000 fine. Potashnik was also ordered to forfeit $1,250,000 to the City of Dallas to be paid within 31 days. Potashnik pleaded guilty in June 2009 to one count of conspiracy to corruptly provide a think of value to reward a public official concerning a local government receiving federal benefits. Judge Lynn sentenced his wife, Cheryl Potashnik, 41, to 2 years probation and to pay a $50,000 fine. She also pleaded guilty in June 2009 to the same offense. Judge Lynn ordered that Brian Potashnik surrender to the Bureau of Prisons on January 11, 2011.

According to plea documents filed in the case, from August 2004 through June 2005, deputy mayor pro tem Don Hill and his Plan Commission appointee, D’Angelo Lee, pressured Brian Potashnik to corruptly provide them, through the hiring of a specific community consultant and a specific subcontractor, with things of value to reward these agents of local government in connection with the business of the Dallas City Council and the City Plan and Zoning Commission. Potashnik did this to advance the general interests of SWH, rather than for any specific SWH development. He also did it to ensure the continuing goodwill of Hill and/or Lee who had supported SWH developments in Dallas. Brian Potashnik wanted that support to continue and refusing Hill and Lee’s demands would adversely affect SWH. So, after initially refusing their demands, Potashnik agreed to their demands to hire a specific community consultant and to hire a specific subcontractor. Potashnik consciously avoided actual knowledge or inquiry that Hill and/or Lee would share financially in these contracts they were requiring him to enter.

According to plea documents signed by Cheryl Potashnik, she believed that it was in SWH’s best interest to ensure the continuing good will of then State Representative Terri Hodge, who had supported affordable housing developments in Dallas. At some point prior to February 27, 2002, Hodge asked SWH for affordable housing for herself, indicating that she had financial problems and couldn’t afford to pay the full rent. Cheryl Potashnik recognized the goodwill and intangible benefits for SWH in having an elected official reside in an affordable housing development in which they had an interest. So, beginning in April 2002, SWH provided Hodge an apartment in the Rosemont at Arlington Park affordable housing development, at a rate of $200 per month; the market rate for that unit was $899 per month. Cheryl Potashnik used at least $27,869 of her own funds to supplement Hodge’s agreed-to reduced rent. During the time of these rent supplements by Cheryl Potashnik, Hodge continued supporting SWH affordable housing developments.